So this happened:
DESIGNATION OF ZIMSWITCH TECHNOLOGIES (PRIVATE) LIMITED (ZIMSWITCH) AS A NATIONAL PAYMENT SWITCH
In accordance with the provisions of the National Payment Systems Act [Chapter 24:23] and the Banking (Money Transmission, Mobile Banking and Mobile Money Interoperability) Regulations, Statutory Instrument 80 of 2020 (the Regulations), the Reserve Bank of Zimbabwe (the Bank) wishes to advise the public that it has designated Zimswitch as a national payment switch with immediate effect.
All mobile money transmission providers and mobile banking providers are hereby directed to be connected to Zimswitch as provided for by section 4 of the Regulations. To ensure seamless integration, all money transmission providers and mobile money providers must complete the necessary Installation or deployment or commissioning of Infrastructure and connection protocols, credentials and documentation for connection to Zimswitch by no later than 15 August 2020.
John P Mangudya Governor 9 July 2020
The threat has come it seems
There has been talk of having one national switch for all transactions for a very long time. Such conversations started intensifying last year and it looks like the central bank has taken a definitive position. What this means is that all payments facilitators in Zimbabwe like banks, EcoCash and other mobile money wallets can now ‘talk to each other’ through Zimswitch.
The business that is affected by this the most is EcoCash because essentially everyone else is on Zimswitch. The mobile money service is a platform in itself with its own ecosystem that banks connect to on EcoCash’s terms.
Designating Zimswitch as the primitive platform that everyone else must connect to takes away incredible chunks of EcoCash’s market power. For example, nothing stops a NetOne customer from merely sticking to NetOne’s OneMoney and not open an account with EcoCash. From their OneMoney such a customer will now be able to send money to or receive it from EcoCash. OneMoney and EcoCash will thus compete on service, innovation and pricing. Of course the interconnection fees will also determine how far this becomes a reality.
We will look at this more closely as we get more details. Some questions to ask are around the fact that Zimswitch itself is a private company owned by some of the banks and a few other private owners. Is this the ideal set up?
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15 comments
This is partially a good thing. Mobile money platforms were told to provide interoperability, and they didn’t, a looooooooooooong time ago.
If they had developed their own switch then, by now it would have been competing healthily against ZimSwitch.
To correct the author, there was never talk of having a “single national switch”. Besides, creating a single point of failure, it creates a corporate monopoly and destroys competitiveness.
We should be Facebook friends 🤷🏾♂️
This is a great move.
Do you think so? Why? I hope it’s not about the argument that EcoCash is becoming a monopoly, right? Last time Supa Mandiwanzira was the minister of ICT he had such ideas about interountil he discovered that EcoCash (read Econet) had invested heavily while the others were sitting on their laurels that he decided to rescind the idea of infrastructure sharing.
Does command economics really work? Econet invested heavily in EcoCash ahead of its competitors. I don’t know who is advanced between EcoCash and zimSwitch. I see the government trying to fight political wars using pliant investors. Let’s see how it pans out.
The fact that Econet invested heavily on Ecocash is of no importance to me as a mobile money user. All I want is the convenience to move money across networks in the same I can transfer funds to other bank accounts from different banks, without any need to open separate accounts with each MNO.
Tru
While there is no harm in interoperability, this can remain a pipe dream if the issue of cost is not addressed. What stops one mobile money operator from charging more for cross network transfer thus discouraging transactions.
Issues to do with settlement and clearing need to be discussed netting or pre-funded, handling of disputes, principles for intra-party compensation (or interchange) and interparty risk. Considering the historical interconnection fees challenges, this really needs the central bank to start working on operationalising the interoperability model by sitting all payment services providers in one room to develop the common operating standards. “Without these rules and standards, in the card industry often referred to as a ‘scheme’, no transactions can be made through the technical switch.”
Government just created another monopoly they can directly influence. Progress & innovation now hinges on one entity. Emotions aside, Ecocash seems way advanced in terms of infrastructure investment and others will simply be happy to freely ride on that shamelessly. Rest assured, the a single point of failure has just been carelessly formed because of sheer spite.
Is Zimswitch also ready for all this traffic being directed to their platform and probably the customer service that might be able to implied?
The issue of not banking our money is solved.
We are finished
Its like also us we dont know what we want? If the government monopolizes service industry you complain , if government forms private public partnerships with Zim-Switch you complain.
and the roller coaster goes on….smh
For so long the banking sector was napping in their white collar ivory towers. In came mobile money players and took them to the cleaners in their own financial services fiefdom. Now big brother has come in the form of banking comrade Mangudya. Thus what RBZ is taking away from Ecocash, a private entity it’s handing to Zimswitch another favoured private entity. What does it to do investor confidence, only time will tell.
Another nrz being created